At a time when India requires a five-fold increase in electricity generation capacity to over 960,000 Mw to sustain the hoped for a 9 per cent Gross Domestic Product (GDP) annual growth rate over the next two decades, the country’s power sector is suffering from an over Rs 5,00,000 crore shortfall in investment, the government has revealed.
”As per latest estimates, this is the gap in financing of capacity addition projects,” said Bharatsinh Solanki, Union minister of state for power, speaking at ‘India Electricity 2009’, an annual power sector event.
Solanki added that timely achievement of financial closure for projects requires increasing the exposure limit of banks, Foreign Institutional Investors and Non-Banking Finance Companies. “The limit should be increased from 20 per cent to 30 per cent for individual borrowers and from 50 per cent to 70 per cent for group borrowers,” he said.
The minister also suggested bringing the external commercial borrowing by financial institutions like Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) under the automatic route.
In a similar development, the government also finally made it clear that only 78 per cent of the current Plan period’s capacity addition target of 78,700 Mw will be possible. “We are optimistic that we will be adding 62,000 Mw in this plan,” said Union power secretary Hari Shankar Brahma, also present on the occasion. So far, around 17,000 Mw of the target has been met in the current Plan period, which ends in March 2012.
He, however, added that in case the additional allocation of 18-20 million metric standard cubic meters per day (mmscmd) of gas, which his ministry has sought from the petroleum ministry, becomes available immediately, setting up another 7,000-8,000 Mw of gas-based capacity over this feasible 62,000 Mw will be possible.
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“I was told by the ministry of petroleum and natural gas that by January 2010 they will be in a position to give about 80 mmscmd of gas (for the fertilizer, power and domestic sectors). If this is not done, then there is a big question mark on achieving the objective of ‘Power for all by 2012’. As many as 37 applications for setting up gas power plants of 35,000 Mw capacity are pending in the Central Electricity Authority (CEA),” he said.
The power ministry has asked for around half of this 80 mmscmd of this gas from the petroleum ministry. However, though the petroleum ministry says it should be able to supply 80 mmscmd by early 2010, this is for all the claimant sectors; how much power will get remains to be seen. “If they give 40 mmscmd gas before 2012, I can give you 8,000 Mw,” Brahma claimed.